Autonomy and decentralization are core principles in the reconstruction of Macao’s political system after the end of Portuguese colonial rule in 1999. Macao was allowed to preserve its gambling-dominated economy and was promised a high degree of autonomous rule in its domestic affairs. China assumed control on defense and foreign affairs, and undertook not to interfere in the domestic affairs of Macao. It has been more than 9 years since the transition. Scholars like Lo(2007: 760) and Lo and Yee(2005: 69) claim that Macao has developed a successful partnership with the central government and there has been no political crisis rocking the relations between the two levels of government. This partnership provided the necessary political stability and effective leadership to allow the indigenous political elite to concentrate on reviving the sagging economy in the aftermath of the Asian financial crisis, on improving the effectiveness of the civil service, and on strengthening the social welfare system. This chapter is an attempt to scrutinize this claim of smooth relations through a revisiting of the meanings of decentralization, and then the examination of recent events through these lenses. The picture presented here is far more complicated and cannot be captured in words like "harmony" and  "smooth ".